Enumerating the key objectives of the Foreign Contribution Act, discuss why the recent amendments in the act are seen as a matter of great concern for the development sector in India.

Foreign Contribution Regulation Act implemented by MHA aims to regulate foreign investments into the country and ensure their use is in lines with public welfare.

Objectives of FCRA:

  • Regulate and monitor inflow of foreign funds.
  • Ensure funds are not used for activities detrimental to India’s security and law & order.

Recent amendments to FCRA:

  • Stricter guidelines for receiving foreign funding by NGOs. Funds can now be received only in designated SBI branches in Delhi.
  • Stricter monitoring – NGOs to submit periodic reports on usage.
  • Changed limits of usage – from earlier 50% to now less than 20% can be used for administrative expenses.
  • Widened category of prohibited persons. Now public servants are also ineligible to receive foreign funding.

Concerns around recent amendments:

  • Reduced flexibility of fund usage for NGOs.
  • Increased cost of compliance.
  • Ban on redirection of money from one NGO to other, impacts the collaboration efforts.
  • Hampers ease of doing business for NGOs.

Need of the hour is to balance development role & positive contribution of NGOs with security concerns.

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